Bellary hopes mining is strictly biz with new govt

Written by P P Thimmaya | Ajay Sukumaran | Bangalore | Updated: May 11 2013, 05:58am hrs
The iron ore-rich district of Bellary in Karnataka became synonymous with the politics of the state over the last five years and now the mining industry is hoping that it would be business as usual with less interference from politicians when a new CM takes over. The BJP-led government in Karnataka was mired in controversy ever since it took over power in 2008 with the iron ore mining industry indulging in rampant illegal activity led by its own ministers - the Reddy brothers.

Now with the Supreme Court clamping down all illegal activity and regulating the industry, there is hope that the new government led by the Congress would be more proactive in aiding the growth of the sector.

Basant Poddar, chairman, Federation of Indian Mineral Industries (FIMI - Southern region), said they were looking forward towards a better future, adding, Politicians should never get involved with the mining industry.

Prior to the ban by Supreme Court in 2011, the iron ore mining industry monopolised by the Reddy brothers were indulging in all kinds of illegal activity driven by a strong demand from China and high prices for the mineral. During the boom years, iron ore prices were hovering around $160-170 per metric tonne, while the cost of extracting the mineral, including freight charges, was around $42. This kind of strong demand saw the annual production of iron ore from the Bellary-Hospet region increasing from 12.4 million metric tonnes (MMT) in FY02 to 44.39 MMT in FY09.

However, this also brought in a severe downside with the sector accused of large-scale corruption and allegations levelled at corporates such as Adani and JSW Steel.

Now that the industry has come under the direct supervision of the Supreme Court with permission given to resume large-scale mining, though the ban on exports remains, there are hopes that this region would get back to the path of growth. The resumption of mining operations will help in mining sector's contribution to GDP and improve socio-economic conditions in Bellary district in particular, by boosting the employment generation, Rahul N Baldota, executive director, MSPL, said last month.

The guidelines laid out by the Supreme Court is likely to ensure a more orderly conduct of the industry with focus on supplying ore to the domestic steel plants. Still, the industry is worried that the cap of 30 million tonne would not work in their favour as the domestic demand is much higher.

Today, the base price of iron ore lumps has been fixed at R3,700 per metric tonnes while it is R2,700 for fines and this could go up depending on the bids put through the e-auction route. There is also now renewed optimism that fresh iron ore mining leases would be given out by the government allowing genuine players in the industry to get the licences.

Before the Supreme Court regulations came into effect, the annual output of iron ore from Karnataka was around 40 million tonne per annum, accounting for around 30% of the national share. The state also accounts for 24% of the total steel production in India with an annual requirement of around 35 million tonne.